Ease of doing business for MSMEs: India’s MSME sector recovering from the Covid impact is likely to grow past the pre-Covid period in revenues this fiscal, according to the Reserve Bank of India’s (RBI) latest monthly bulletin. “The MSME sector is on a path of recovery with revenues likely to cross pre-pandemic levels in 2023-24, except for export-oriented sectors affected by global headwinds,” said an article by multiple authors including RBI’s Deputy Governor Michael Debabrata Patra and Deba Prasad Rath, Principal Adviser at the central bank’s Department of Economic Policy and Research in the April bulletin.
Earlier this year, the Economic Survey 2022-23 had also highlighted MSMEs’ recovery as reflected in the GST data. According to the survey in January, the GST paid by MSMEs had dropped from Rs 5 lakh crore in FY20 to around Rs 4.7 lakh crore in FY21 before climbing to around Rs 5.5 lakh crore in FY22.
Moreover, an analysis by credit rating agency Crisil earlier this month had noted that the MSME sector’s EBITDA (earnings before interest, tax, depreciation and amortisation) margin, which indicates earnings of an enterprise before factoring in non-operating expenses, will grow past the FY20 level to reach nearly 6 per cent this fiscal. The revenue, on the other hand, is expected to reach 1.36 times the pre-Covid level for the sector.
Easing commodity prices may support improvement in profit margins and improve credit profiles in the MSME sector, the article in the RBI bulletin said adding that revenues have recovered across hotel classes in the hospitality industry, indicating its widespread revival.
Even as the sector sees recovery, a report in March this year by a Parliamentary panel on industry had recommended the MSME ministry for a comprehensive study in order to understand the current situation of the sector and to know whether MSMEs have actually recovered from the pandemic effect or still reeling under its impact.
“It is learnt that performance of the MSMEs during the last five years has not been very encouraging…The committee may also like to be apprised about the findings of the study for its consideration considering the fact that a resilient and dynamic MSME Sector will be instrumental in realising the goal of Make in India and Atma Nirbhar Bharat,” the report presented in the Rajya Sabha noted.
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